Pay differentials:
the case of Japan
In Japan, as in the United States, employees' investment
in human capital cannotfully explain the tendency
of largerfirms to pay higher wages; idiosyncrasies
of the labor market, such as the extensive payment
of bonuses and practices related to lifetime employment,
may accountfor much of the remaining gap
ROBERT EVANS, JR .
In a review of industrial relations research conducted during
the 1970's, James G. Scoville writes that, in both Japan
and the United States, size-of-firm wage differentials are
explained by differences in employees' human capital .'
However, two recent studies suggest that human capital
differences do not completely explain the differentials in this
country. Using data for 1979, Wesley Mellow found that
wages in firms of 1,000 or more workers were 8 percent
greater than those in firms with fewer than 25 workers when
a number of factors, including education and experience,
were held constant .2 Martin E. Personick and Carl B . Barsky, who studied pay at various experience and responsibility levels of professional, technical, and clerical
occupations, reported size-of-firm differentials for all but 1
of 25 job levels . Typically, these were only for the largest
corporations (more than 10,000 employees), where differentials were 10 to 15 percent for professionals and 20 percent
for clerical and technical occupations over pay in firms with
500 or fewer employees .'
If elements of human capital do not completely explain
size-of-firm differentials in the United States, is Japan a
similar case? This article explores that issue, and suggests
Robert Evans, Jr. is Atran Professor of Labor Economics at Brandeis
University, Waltham, Mass .
24
an answer based on data from the Chingin Kozo Kihon Tokei
Chosa [Wage Structure Survey] .'
The employment decision in Japan
The model employment relationship in Japan is that of
Shushin Koyo [lifetime employment] .' Under this system,
workers are initially employed upon graduation from school .
Once a worker is hired, the firm goes to great lengths to
provide continuous employment until the individual retires,
sometime between the ages of 50 and 60 . In return for the
understood employer commitment to long tenure, the employee is expected to devote himself fully to the firm and
to allow management considerable flexibility as to the type
and geographical location of work assignments .
Remuneration consists of a basic wage, various allowances, a semiannual bonus, and a number of fringe benefits .
The basic wage depends upon the employee's education,
age, and job abilities . It is increased annually based upon
decisions made in collective bargaining . The annual increase
consists of two parts, one of which recognizes an additional
year of service to the firm, new job abilities, and merit, and
another that is a general increase in the base wage .
Given the employment opportunities and wage patterns
faced by the graduating student, what pecuniary variable
should be used in making the employment decision? Clearly,
it is some subjective assessment of the present value of
future earnings with the various firms. Such a present value
calculation would incorporate expected growth of the firm
relative to the economy, the pattern of wages associated
with long tenure, the pattern of wages if tenure is short
because of voluntary mobility or the firm's economic difficulties, and so forth. For the observer trying to approximate
such individual calculations, the most desirable data would
be those on wages and bonuses by worker age, education,
and length of service, and, for the question at hand, the
size of the employing firm . Fortunately, these data are available in the annual Wage Structure Survey . It is thus possible
to account for the principal elements of human capital that
economists believe are important for wage determination,
and to differentiate these among three size-of-firm categories . (Of course, the individual graduate also considers other,
unquantifiable factors, such as his preference for risk, the
prestige of the firm, and subjective probabilities of advancement, in making the final decision .)
underlying the estimates relate to individuals whose tenure
suggests that they have been continuously employed by the
same firm since graduation . Thus, only a few of all possible
matched age-tenure pairs are shown, but these represent core
groups in the economy . Two distributions are presented,
one for monthly wages and one for monthly wages plus
one-twelfth of annual bonus payments . Again, the inclusion
of bonuses tends to increase the income differences among
the three size-of-firm classes, and the benefits of working
for the larger firms increase with age and tenure .
The pay relatives suggest little in the way of systematic
variation by industry, although those for transportation and
communications tend to be quite high in smaller firms while
those in finance and insurance are comparatively low . The
indices of each industry's differentials were ranked and compared to rankings by union penetration and proportion of
total employment in large firms by industry . Neither comparison indicated any systematic relationship with size-offirm differentials .
Except for occupations that require substantial trainingairline pilots, construction crafts, and so forth-occupational distinctions are weakly, if at all, correlated with wages
in Japan . Hence, while table 3 shows significant occupational wage differentials by size of firm, these results may
be less meaningful than estimates based on other variables.
The data in table 2 do suggest that experience with the
firm is seen as a specific human capital investment with its
own rewards. Yet the greater opportunity to achieve long
tenure which characterizes employment in large firms should
also be seen as an additional benefit to such employment,
unless the individual worker has a positive taste for risk .
New graduates are quite aware that their prospects for long
tenure with a large firm are more promising than with a
smaller firm . For example, in 1981, 79 .4 percent of all
college educated men age 45 to 49 who were employed in
firms with 1,000 workers or more had worked 20 or more
years for their current employer . The figure for those in
firms with 100 to 999 workers was 54 .5 percent, and for
firms with 10 to 99 workers, it was 31 .7 percent. Earnings
Differentials by size of firm
Table l presents monthly wage and wage-plus-bonus 6
relationships by size of firm and by workers' age and educational attainment for Japanese men who have been continuously employed by the same firm . (In 1980, about onefourth of the regular private-sector labor force were employed by firms of 1,000 workers or more, and another onefourth were in firms with 100 to 999 employees.) According
to the table, compensation is generally less in the smaller
companies, regardless of worker age or education . Monthly
wages are about the same in the two smaller size classes
until workers are in their forties, when those in the mediumsize firms begin to receive more . When bonus payments are
included as compensation, the differences between the largest and smallest firms become more dramatic . In general,
the higher the level of education, the larger is the wage gap
by size of firm .
To more fully illuminate these relationships, table 2 presents compensation relatives by industry for broad age categories of high school and college educated men . Data
Ta ble 1 .
Monthly pay relatives for Japanese men, by firm size and worker's age and educational attainment, 1981
[Firms with 1,000' workers - 100]
Worker's age
Junior high school graduates
Wage
Wage +bonus
High schoo l graduates
Wage
Wage +bonus
Wage
College graduates
Wage +bonus
100-999
workers
10-99
workers
100-999
workers
10-99
workers
100-999
workers
10-99
workers
100-999
workers
10-99
workers
100-999
workers
10-99
workers
100-999
workers
10-99
workers
18-19
94
97
97
87
95
93
93
91
-
-
-
-
25-29 . . . . . . . . . . . . .
30-34 . . . . . . . .
98
96
106
100
96
100
96
92
93
91
97
94
91
89
92
87
91
88
95
94
85
85
88
86
96
94
92
95
85
77
95
85
77
20-24 . . .
35-39
. .
.
. . . . . . .
40-44 . . . . . . . . . . . .
45-49 . . . . . . . . . . .
50-54 . . . . . . . . . . .
NOTE :
93
94
98
94
90
94
89
87
85
78
72
Data refer to men who have been continuously employed by the same firm .
95
89
87
87
91
97
88
83
83
79
SouRcF :
93
86
82
81
86
91
81
75
72
69
99
86
83
85
88
1981 Wage Structure Survey, vol
97
89
83
79
80
97
82
78
79
80
93
80
75
69
70
III, pp . 139-41 .
25
MONTHLY LABOR REVIEW October 1984 * Japanese Pay Differentials
data for 50- to 54-year-old high school educated men suggest
that workers do not have to pay a compensation premium
for the greater probability of long tenure : Among those with
30 or more years of tenure, wages plus bonuses in large
firms are 17 percent higher than in middle-size firms and
31 percent higher than in small firms, while the comparable
figures for similarly aged workers at all levels of tenure are
25 percent and 40 percent .
Employment opportunities for women, especially at highlevel jobs and with the major employers, are markedly different from those for men, although there have been changes
toward equality during the postwar years. In particular, men's
wages increase more with age: In 1981, the 50- to 54-yearold high school educated male with 1 to 2 years of firm
tenure had a monthly wage that was 56 percent higher than
that of a similarly educated 18- to 19-year-old . Among
women, the worker age 50 to 54 received only 17 percent
more than her younger counterpart . Yet, firm-specific tenure
appears to be relatively more valuable for older women than
for older men. This is probably because women with brief
tenure are likely to have been in the labor market for only
a short time, which is not typically the case for men. Yet,
when the compensation of high school educated workers
with at least 30 years' tenure was compared by size of firm,
the patterns for men and women were quite similar. Women's wages plus bonus in firms with 1,000 workers or more
were 18 percent higher than in firms with 100 to 999 workers, and 26 percent higher than in small firms . Again, there
is no compensation premium paid by workers for the probability of long tenure in larger firms: At ages 50 to 54 for
all levels of tenure, wages plus bonus for women in the
largest firms were 36 percent higher than in middle-size
firms and 44 percent higher than in the smallest firms .
Table 2 .
The puzzle
It seems clear in Japan, as in the United States, that the
standard human capital variables of education and experience do not completely explain, if ever they did, size-offirm differentials. In addition, it is evident that the Japanese
differential is much larger after age 40 or when bonus income
is included . Any explanation, therefore, must be consistent
with the age pattern demonstrated and the concentration of
the differential in the bonus portion of compensation .
It is possible that a more exhaustive test of worker characteristics would reduce the size of the differential . We
know, for example, that the most able students enroll in the
very best schools, from which the larger, more successful
corporations seek employees .' Yet it seems unlikely that
such difficult-to-measure characteristics of employees could
explain wage differentials of the magnitude shown in the
tables .
Widening differential with age . Some recent studies of
compensation by age include variables for implicit contracts, experience, risk, incentives, and so forth, that may
explain the Japanese pattern . One approach incorporating a
variety of these concepts was presented in a 1982 article by
Milton Harris and Bengt Holmstrom .9
According to the authors, there are four possible reasons
why compensation increases with age : a) firms learn about
individual abilities and are better able to match workers to
jobs ; b) workers begin to pay employers lower implicit
premiums to guarantee their ability to do acceptable work ;
c) employees learn productivity-enhancing skills ; and d) pay
levels are a particularly important means to motivate employees in a world of lifetime employment security . The
first two of these, while consistent with a general widening
Monthly pay relatives by industry and size of firm for selected age and tenure groups of Japanese men, 1981
[Firms with 1,000' workers = 100[
Age 30 to 342
Age 18 to 191
Age 35 to 393
Age 50 to 544
Wage + bonus
Wage
Wage + bonus
Wage
Wage + bonus
Wage
100-999 10-99 100-999 10-99 100-999 10-99 100-999 10-99 100-999 10-99 100-999 10-99 100-999 10-99 100-999 10-99
workers workers workers workers workers workers workers workers workers workers workers workers workers workers workers workers
Wage
Ind us t ry
Wage + bonus
All private . . . . .
93
89
91
88
91
91
88
84
88
79
84
71
86
79
79
60
Mining . . . . . . . . .
Construction . . . . .
75
111
83
102
77
112
81
100
89
90
93
92
90
88
91
83
95
85
92
97
88
84
84
90
85
82
70
82
82
77
62
68
Trade . . . . . . . . . .
Finance and
insurance . . . . . .
96
95
95
93
89
85
83
87
92
83
83
94
114
88
101
110
Real estate . .
Services . . . .
Transportation
and communication .
Utilities . . . . .
. . . .
. . . .
. . . .
. . . .
. . . .
Manufacturing . . . .
90
87
90
86
93
74
100
99
95
111
92
91
92
116
101
116
96
125
92
105
101
94
116
93
106
124
102
126
100
95
90
69
91
89
93
86
83
82
82
78
68
72
67
80
76
75
87
76
80
63
84
91
78
84
92
94
79
85
90
130
90
110
94
110
91
102
89
102
85
99
90
94
86
95
80
93
64
87
81
83
63
'Data for 18- to 19-year-olds are for those with less than 1 year of firm tenure, or
approximately 59 percent of the total age cohort .
2Data for 30- to 34-year-olds are for those with 10 to 14 years of tenure, or about 26
percent of the total cohort .
26
88
79
93
87
90
70
84
91
88
98
85
80
81
86
73
3Data for 35- to 39-year-olds are for those with 10 to 14 years of tenure, or about 50
percent of the total cohort .
4Data for 50- to 54-year-olds are for those with 25 to 29 years of tenure, or about 38
percent of the total cohort .
Table 3 . Monthly pay relatives by occupation and size of
the employing firm for Japanese men age 35 to 39 with 10
to 14 years of tenure, 1981
(Firms with 1,000' workers = 1001
100-999 workers
Wage Wage + bonus
Occu p ation
10-99 workers
Wage
Wage + bonus
Department head . . . . . . . .
92
86
-
-
Systems engineer . . . . . . .
Programmer . . . . . . . . . . .
Chauffeur . . . . . . . . . . . . .
86
101
87
84
97
86
86
95
77
82
88
73
Section head . . . . . . . .
. .
Truck driver . . . . . . . . . . .
79
74
-
-
90
89
87
84
Crane operator . . . . . . . . .
106
104
95
89
Lathe operator . . . . . . . . .
Machine assembler . . . . . .
Mechanical draftsman . . . .
93
92
94
91
91
91
88
100
95
85
85
89
Retail sales (except
department stores) . . . . .
87
80
87
78
Guard . . . . . . . . . . . . . . .
Chemical reaction worker . .
Metal press operator . . . . .
Auto assembler . . . . . . . . .
73
97
86
93
66
96
85
92
67
92
80
82
64
90
76
78
of the wage differentials over time, do not imply a rapid
shift after the age of 40 . The second two appear to be more
relevant .
In the larger firms, there is more physical capital per
worker, which could yield greater productivity, and thus
justify higher wages. It also is probable that the interaction
of higher quality employees with similar employees and with
higher levels of physical capital generates greater increases
in human capital in the larger firms. The development of
productivity enhancing skills with additional tenure may
well be an important element in the ability of large firms
to pay high wages. Indeed, in the context of a technologyspecific skills model, Hong Tan has argued that such gains
over a working life are key determinants of Japanese wage
patterns . '° A somewhat similar argument was made by Kazuo Koike, who hypothesized that the more developed system of internal training in large firms provides a greater
range of technologically related positions than is true in
smaller firms, which in turn contributes to wage differentials
by size of firm .'' However, even if enhanced skills are an
important factor, there remains the problem of timing . Why
should so much of the differential be concentrated in the
years after age 40?
The last element, motivational allowances, may best explain the time pattern . 11 As is well known by the organizers
of games of chance, large prizes and prizes that are ever in
the future seem to have disproportionate power to motivate
participants when compared to their discounted value. Many
of the new employees in major Japanese firms will not be
there to collect their "prize" at older ages, but the promise
of greater compensation is a constant motivating factor .
Thus, the firm saves money compared to paying an annual
motivational allowance to each employee . In a sense, the
firm also has received an interest-free loan from the employee, who has tacitly agreed to defer a portion of compensation to later worklife . In a rapidly growing economy,
such an arrangement is highly advantageous to the firm, but
even in less dynamic times an interest-free loan has value .
Japanese institutions . There are two institutional factors
unique to Japan which also have significantly affected the
time pattern of the differential and its size . The concept of
a living wage based upon family needs has long been important in Japan ." It is rooted in the nation's history, but
has become more prominent since World War 1, and particularly since the economic difficulties of the post-World
War II years . The concept provides that wages should increase over a worker's life to accommodate marriage, the
birth of children, the high costs of private college, and
savings for early retirement from the primary employer . The
latter two factors would suggest significant wage increases
after the age of 40 .
The second institutional consideration is that the nature
of the large corporation in postwar Japan is quite different
than in prewar years . Formerly, corporations were uniquely
capitalistic, owned and controlled by wealthy individuals .
However, share ownership in postwar Japan has tended to
be diluted into the hands of other firms and banks. There
is a high proportion of capital in the form of loans and
internally generated funds, and an almost complete absence
of outside directors . These changes, in conjunction with
Japanese historical patterns and moral visions, have persuaded many scholars that today's large firms are essentially
collectives of employees who hire high risk-high gain capital
from shareholders and low risk-fixed gain capital from banks.
If the assumption that the Japanese corporation is a collective
of employees which hires capital rather than a collective of
owners of capital which hires workers (including senior
managers) is valid, it is hardly surprising that economic
rents are shared among the members of the collective-the
employees. "4
The extensive use of bonus payments as the mechanism
to pay out significant portions of the higher income received
by employees in large firms is more complicated to explain .
The payment of a semiannual bonus is a very old Japanese
practice which was intended to provide ,employees with
sufficient funds to meet the extra needs associated with certain cultural and religious practices. The bonus also served
to provide a measure of equity and motivation in the form
of profit sharing . However, with the democratization of
employment in the postwar years, a significant bonus, which
to an extent had been reserved for white-collar and management employees, was extended to all workers ."
While extensively used by all Japanese employers, the
bonus tends to be relatively larger in the larger firms, while
smaller firms compete for labor on the basis of regular
monthly wages . The emphasis small firms give to wages as
opposed to bonuses seems to be attributable to two factors:
First, the firm wants to provide a monthly wage to cover
the necessities of life, and second, a somewhat less rosy
employment future gives any "promised" bonus made by
27
MONTHLY LABOR REVIEW October 1984 a Japanese Pay Differentials
a smaller employer less value than an equivalent promise
by a large employer. Consequently, one would expect that
smaller firms would first meet competitive levels in monthly
wages, and only later meet those of the bonus .
Patterns over time
Trends in pay relatives' by size of firm, 1955-81
[Firms with 1,0001 employees = 100]
Year
100-999
workers
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1967 .
1966 .
1965 .
1964 .
1961 .
1960z
19553
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1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
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Wage
Wage + bonus
10-99
workers
100-999
workers
10-99
workers
94
92
95
96
96
95
96
91
88
91
91
90
90
89
92
91
93
93
94
93
95
86
81
84
84
84
82
83
97
97
95
99
93
96
86
95
95
94
93
80
80
66
100
105
98
93
92
91
92
90
94
88
86
83
86
82
100
104
96
93
93
88
89
95
93
92
101
-
i
86
90
82
80
79
79
75
87
85
83
-
'Data are for male production workers in manufacturing who had at least a high school
education, and who were age 35 to 39 with 15 to 19 years of tenure in the reference
year.
z0ata are for all 35-to 39-year-old male blue-collar high school graduates, regardless
of tenure .
3Data are for all high school educated men with 15 to 19 years of tenure, regardless
of age. In 1955, data were available for five employment size categories . The differentials
shown here were estimated from the differentials of component size categories weighted
by the number of employees in each .
28
Median and Interquartile range of current-dollar
monthly wages in manufacturing for male production
workers age 35 to 39, by size of firm, selected years
[In thousands of yen]
Year
There is no simple measure of the degree of wage difference by size of firm because the wage ratios between
alternative matched pairs do not all move together . To describe movements over time, I chose to examine wages for
35- to 39-year-old male high school graduates with 15 to
19 years of tenure who worked as production workers in
manufacturing (table 4) . In addition, data on wage dispersion are provided for selected years (table 5) . According to
table 4, size-of-firm differentials that were quite wide in
1955 closed somewhat, reaching near equality in 1964 . The
1960's were a period of generally tightening differentials as
the labor market became much more competitive, and the
productivity levels of small firms approached those of large
firms . 16 After 1967, the differential gradually widened until
a second period of near equality occurred during the oilshock years 1973-74. This second narrowing was undoubtedly related to inflation," for employment growth in manufacturing had leveled off, turning negative by 1972 .
The estimates in table 4, which have been standardized
for industry, general type of work, age, sex, education, and
firm tenure, suggest that size-of-firm wage differentials have
remained relatively constant since 197,5 . However, the figures in table 5, which exclude bonuses and include data for
Table 4 .
Table 5 .
1954
1960
1967
1974
1981
1,000' workers
Median
Interquarfile range
22 .6
31 .6
54 .0
131 .3
214.8
40
44
32
22
20
100-999 workers
10-99 workers
Median
Interquartile range
Median
Interquarthe range
18 .6
25 .3
45 .6
121 .7
197.9
51
49
63
30
25
13 .7
19 .4
40 .0
109.9
190.7
57
71
48
37
30
NOTE : The interquartile range, a common measure of dispersion, is the difference
between the highest wage observation for the bottom 25 percent of the workers and the
lowest observation for the top 25 percent.
workers at all levels of education and years of firm tenure,
show a continuing narrowing of the dispersion of wages
within the three size classes . Both tables imply that there
has been a greater narrowing of differences between firms
of 10 to 99 employees and those with 100 to 999 employees
than between the latter and firms of 1,000 and more employees .
A comparison with the United States
Recent estimates of size-of-firm differentials in the United
States, cited earlier, permit some limited comparisons. Wesley Mellow's estimate of an 8-percent pay advantage in firms
of 1,000 workers or more over firms with fewer than 25
employees appears relatively modest compared to most of
the differentials for Japanese men shown in tables I and 2.
In the United States, as in Japan, the large-firm differential
was greater when specific firm tenure was not considered,
and the differential existed across all major industries, although the U.S . differential appeared to be greater in manufacturing than in nonmanufacturing .
Personick and Barsky's study of professional, technical,
and clerical occupations revealed as typical 10- to 15-percent
differentials for professionals and a 20-percent gap for clerical and technical occupations between firms of 10,000 or
more employees and those with 500 or fewer employees .
Although these estimates are for quite different firm-size
classes, they do approximate the differentials reported in
table 1 for younger Japanese high school and college graduates, but they are smaller than those for older college
educated males . Interestingly, the U .S . size-of-firm differential seemed to be larger for workers with less than a
college education. Also, the U .S . differentials were larger
for entry-level positions than for higher levels of experience .
Again, this is the opposite of the Japanese case, in which
differentials widen at older ages . These differences between
the two countries are consistent with a situation in which
large firms pay above-market prices in order to pick and
choose among applicants whose employment potential has
not yet been established, but in which one economy embraces the norm of continuous tenure from graduation while
the other anticipates considerable interfirm mobility at younger ages .
0
FOOTNOTES
' James G. Scoville, "A Review of International and Comparative Research in the 1970's," in Thomas A. Kochan, Daniel J. B. Mitchel, and
Lee Dyer, eds ., Industrial Relations Research in the 1970's : Review and
Appraisal (Madison, Wis., Industrial Relations Research Association, 1982),
P . 25 .
2 Wesley Mellow, "Employer Size and Wages," Review of Economics
and Statistics, August 1982, pp . 495-501 .
'Martin E. Personick and Carl B. Barsky, "White-collar pay levels
linked to corporate work force size," Monthly Labor Review, May 1982,
pp . 24-26.
"Published since 1954 and annually since 1964 by the Japanese Ministry
of Labor .
s Ever since James Abbeglen coined the phrase "lifetime commitment"
(translated into Japanese as shushin koyo and then retranslated as lifetime
employment), there has been a lively debate over the nature and extent of
this system . Recently, the tendency has been to downplay the significance
of lifetime employment for the Japanese economy; given the early ages of
mandatory retirement (currently 55 to 60 years), the higher levels of mobility among those who work for smaller firms, and so forth, few individuals
literally spend their entire working lives with a single employer . However,
the impact of shushin koyo should not be measured by the proportion of
workers who do spend their entire lives in the employ of one firm . Perhaps
the most important role of the system is to promote a concept of mutual
commitment between employers and their workers that dominates the Japanese labor market and shapes practices even for those workers (including
most women) who are not beneficiaries of the benefits which the system
provides to workers more directly involved .
"in Japan, wages (including any overtime payments) are paid on a
monthly basis, and that is the wage concept used in this study. In a world
of continuous employment, hours of work for full-time workers are a
condition of employment and not a variable which should be divided into
wages. Use of average hourly rates would only expand the differences
reported here : In 1981, average monthly hours worked by male employees
were 197 in firms of 1,000 workers or more, 200 in firms of 100 to 999
workers, and 210 in firms of 10 to 99 workers . Middle school graduates
worked more hours than did high school graduates, who worked more
hours than college graduates, and for each educational level, the larger the
firm, the fewer the hours .
The bonus data (technically special payments, of which bonuses are the
principal part) for table 2 are available by sex, age, educational attainment,
and size of employing firm, but not by length of tenure . Because bonuses
are bargained and expressed in monthly-wage equivalents, the average
number of months of bonus for a given sex, age, education level, and size
of firm times the monthly wage at the relevant tenure level divided by 12
has been added to the average monthly wage to obtain estimates of the
monthly wage plus bonus.
7 No doubt there are today some combinations of equity participation
and employee compensation in small firms which will ultimately provide
more income than a slow but steady progression in a large firm . The key
would be to know which small firm in 1981 is the Sony or Honda of the
future .
"Shigemi Wakamatsu, "Foreign Firms Compete for Local Talent in
Japan," The Asian Wall Street Journal, Apr . 27, 1983, p . 8 .
"Milton Harris and Bengt Holmstrom, "A Theory of Wage Dynamics,"
Review of Economics and Statistics, July 1982, pp . 315-33 .
"Hon W. Tan, "Wage Determination in Japanese Manufacturing: A
Review of Recent Literature," Economic Record, March 1982, pp . 5657 .
"Kuzuo Koike, "Workers in Small Firms and Women in Industry,"
in Taishiro Shirai, ed ., Contemporary Industrial Relations in Japan (Madison, University of Wisconsin Press, 1983), pp . 99-100 .
'2Edward P. Lazear makes a similar point in "Agency, Earnings Profiles, Productivity and Hours Restrictions," American Economic Review,
September 1981, p. 618.
"Naomichi Funahashi, "The Industrial Reward System," in Kazuo
Okochi and others, eds. Workers and Employers in Japan (Tokyo, University of Tokyo Press, 1974), p. 362.
"Kenichi Ohmae, The Mind o/ the Strategist (New York, McGrawHill, 1982), p. 219; Naoto Sasaki, Management and Industrial Structure
in Japan (London, Oxford-Pergamon Press, 1981), p. 63 ; and Gene Gregory, "The Logic of Japanese Enterprise," a paper presented at the International Productivity Symposium, Tokyo, May 1983, p. 38 .
'5 For a history of the development of the bonus system, see Koji Taira,
Economic Development and the Labor Market in Japan (New York, Columbia University Press, 1971).
"Taishiro Shirai and Haruo Shimada, "Japan," in John T. Dunlop and
Walter Galenson, eds ., Labor in the Twentieth Century (New York, Academic Press, 1978), p . 307.
"The impact of inflation on differentials is discussed in Robert Evans,
Jr ., "Wage Differentials, Excess Demand for Labor and Inflation : A Note,"
Review of Economics and Statistics, February 1963, pp . 95-98.